DOL to issue proposal to help states avoid ERISA

The Department of Labor is expected to release a pair of guidelines to help states that want to avoid or embrace the Employee Retirement Income Security Act, according to Phyllis Borzi, assistant secretary of the DOL’s Employee Benefits Security Administration. The guidelines should be released by the end of the year, she said last week during the ASPPA Annual Conference in National Harbor, Md.

The current safe harbor has limitations, Borzi said, and the DOL’s proposal will address issues raised by those states that want to take an “avoid ERISA” approach. These states have asked for guidelines so they can minimize the chance of an ERISA pre-emption, she said.

Also see: “States helping workers save for retirement.”

The DOL will also release sub-regulatory guidance for states that want to take an “embrace ERISA” approach, Borzi said, possibly permitting those states to offer plans similar to master and prototype retirement plans. States would act as the service provider to employers who want to join the plan, she said.

Borzi couldn’t speak to any specifics as the DOL is still in the process of figuring out the details, but the sub-regulatory guidance is expected to be released around the same time as the other proposal, she said.

Persisting challenges

The DOL is focused on expanding coverage and improving adequacy — those two challenges have not changed since ERISA was enacted 41 years ago, Borzi said. “They continue to be problems,” she said. “These are the same problems that we are grappling with all across the world.”

Automatic features — like auto enrollment and auto escalation — have helped, Borzi said. But, employees need to be offered a plan before they can enroll, she said.

Unfortunately, 68 million Americans still lack a retirement plan at work, Borzi said. Many of those employees include self-employed, low-wage service industry workers and part-time employees, all of whom are tough to reach, she said.

The government’s myRA plan has helped expand coverage, said Mark Iwry, deputy assistant secretary of the Department of the Treasury. This account helps those who have never saved before learn the habit of saving, he said. “This is a starter account,” Iwry said.

Still, new solutions are needed to address the retirement challenges, Borzi said. “No one has a silver bullet,” she said. “We are very interested in hearing good ideas.”

Also see: “Full coverage DOL fiduciary hearings.”

Plenty of those poured in during the public comment period of the DOL’s proposed fiduciary rule, Borzi said. There was a mix of support and opposition to the conflict of interest rule, and a lot of constructive suggestions, she said.

“People gave us some really good ideas,” Borzi said. “We listened, we learned. It wasn’t a check-the-box activity.” 

For reprint and licensing requests for this article, click here.
Retirement benefits State health insurance exchanges Federal health insurance exchanges
MORE FROM EMPLOYEE BENEFIT NEWS